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Chairman of the trust John de Blocq van Kuffeler said: 'The board has become increasingly concerned that although the company's current financial position is sound, its structure is inappropriate for investment in the technology sector at this time.

'In particular, the burden of the 13p per annum dividend payable on the company's preference shares has become unduly onerous as the overall net asset value of the company has declined.'

HSBC investment trust analyst Paul Locke said the burden of servicing the preference shares exacerbates the impact of weak underlying markets on the trust, which was formed near the peak of the technology boom in 2000 out of the reconstruction of the Fleming Geared Growth investment trust.

'The reconstruction will also have to deal with the trust's outstanding £13.4m in bank borrowings. This was taken out at the time of the trust's reconstruction into a technology trust and carries a strong relative cost in terms of its fixed interest rate of 7.61%,' he said.

Shares in the trust were trading at a discount to NAV of 52.2% on 27 September. Details of the reconstruction will be released by 30 October.

Iimia head of investment trusts Nick Greenwood said: 'I would bet money that none of the trusts below the £10m market cap will be in their current format in 12 months' time.'